Part One
How Proudhon Solves the Housing Question

In No. 10 and the following numbers of the Volksstaat
appears a series of six articles on the housing question. These articles
are only worthy of attention because, apart from some long-forgotten would-be
literary writings of the ‘forties, they are the first attempt to transplant
the Proudhonist school to Germany. This represents such an enormous step
backward in comparison with the whole course of development of German socialism,
which delivered a decisive blow particularly to the Proudhonist ideas as
far back as twenty-five years ago, [In Marx: Misère de la Philosophie,
etc., Bruxelles et Paris, 1847 (The Poverty of Philosophy, etc.).
– Note by F. Engels.] that it is worth while answering it immediately.

The so-called housing shortage, which plays such a great role
in the press nowadays, does not consist in the fact that the working class
generally lives in bad, overcrowded and unhealthy dwellings. This shortage
is not something peculiar to the present; it is not even one of the sufferings
peculiar to the modern proletariat in contradistinction to all earlier
oppressed classes. On the contrary, all oppressed classes in all periods
suffered more or less uniformly from it. In order to make an end of this
housing shortage there is only one means: to abolish altogether the exploitation
and oppression of the working class by the ruling class. — What is meant
today by housing shortage is the peculiar intensification of the bad housing
conditions of the workers as the result of the sudden rush of population
to, the big towns; a colossal increase in rents, a still further aggravation
of overcrowding in the individual houses, and, for some, the impossibility
of finding a place to live in at all. And this housing shortage gets talked
of so much only because it does not limit itself to the working class but
has affected the petty bourgeoisie also.

The housing shortage from which the workers and part of the petty
bourgeoisie suffer in our modern big cities is one of the numerous smaller,
secondary evils which result from the present-day capitalist mode of production.
It is not at all a direct result of the exploitation of the worker as a
worker by the capitalists. This exploitation is the basic evil which the
social revolution strives to abolish by abolishing the capitalist mode
of production. The cornerstone of the capitalist mode of production is,
however, the fact that our present social order enables the capitalists
to buy the labour power of the worker at its value, but to extract from
it much more than its value by making the worker work longer than is necessary
in order to reproduce the price paid for the labour power. The surplus
value produced in this fashion is divided among the whole class of capitalists
and landowners together with their paid servants, from the Pope and the
Kaiser, down to the night watchman and below. We are not concerned here
as to how this distribution comes about, but this much is certain: that
all those who do not work can live only from fragments of this surplus
value which reach them in one way or another. (See Marx’s Capital where
this was worked out for the first time.)

The distribution of this surplus value, produced by the working
class and taken from it without payment, among the non-working classes
proceeds amid extremely edifying squabblings and mutual swindling. In so
far as this distribution takes place by means of buying and selling, one
of its chief methods is the cheating of the buyer by the seller, and in
retail trade, particularly in the big towns, this has become an absolute
condition of existence for the sellers. When, however, the worker is cheated
by his grocer or his baker, either in regard to the price or the quality
of the commodity, this does not happen to him in his specific capacity
as a worker. On the contrary, as soon as a certain average level of cheating
has become the social rule in any place, it must in the long run be leveled
out by a corresponding increase in wages. The worker appears before the
small shopkeeper as a buyer, that is, as the owner of money or credit,
and hence not at all in his capacity as a worker, that is, as a seller
of labour power. The cheating may hit him, and the poorer class as a whole,
harder than it hits the richer social classes, but it is not an evil which
hits him exclusively or is peculiar to his class.

And it is just the same with the housing shortage. The growth
of the big modern cities gives the land in certain areas, particularly
in those which are centrally situated, an artificial and often colossally
increasing value; the buildings erected on these areas depress this value,
instead of increasing it, because they no longer correspond to the changed
circumstances. They are pulled down and replaced by others. This takes
place above all with workers’ houses which are situated centrally and whose
rents, even with the greatest overcrowding, can never, or only very slowly,
increase above a certain maximum. They are pulled down and in their stead
shops, warehouses and public buildings are erected. Through its Haussmann
in Paris, Bonapartism exploited this tendency tremendously for swindling
and private enrichment. [Haussmann was Prefect of the Seine Department
in the years 1853-70 and carried on big building alterations in Paris in
the interests of the bourgeoisie. He did not fail to profit himself also.
-Ed.] But the spirit of Haussmann has also been abroad in London, Manchester
and Liverpool, and seems to feel itself just as much at home in Berlin
and Vienna. The result is that the workers are forced out of the centre
of the towns towards the outskirts; that workers’ dwellings, and small
dwellings in general, become rare and expensive and often altogether unobtainable,
for under these circumstances the building industry, which is offered a
much better field for speculation by more expensive houses, builds workers’
dwellings only by way of exception.

This housing shortage therefore certainly hits the worker harder
than it hits any more prosperous class, but it is just as little an evil
which burdens the working class exclusively as the cheating of the shopkeeper,
and it must, as far as the working class is concerned, when it reaches
a certain level and attains a certain permanency similarly find a certain
economic adjustment.

It is with just such sufferings as these, which the working class
endures in common with other classes, and particularly the petty bourgeoisie,
that petty-bourgeois socialism, to which Proudhon belongs, prefers to occupy
itself. And thus it is not at all accidental that our German Proudhonist
occupies himself chiefly with the housing question, which, as we have seen,
is by no means exclusively a working class question; and that, on the contrary,
he declares it to be a true, exclusively working class question.

“As the wage worker in relation to the capitalist, so is the tenant in relation to the house owner.” [Mülberger in Der Volkstaat February 10 1872]

This is totally untrue.

In the housing question we have two parties confronting each other:
the tenant and the landlord or house owner. The former wishes to purchase
from the latter the temporary use of a dwelling; he has money or credit,
even if he has to buy this credit from the house owner himself at a usurious
price as an addition to the rent. It is simple commodity sale; it is not
an operation between proletarian and bourgeois, between worker and capitalist.
The tenant – even if he is a worker – appears as a man with money; he
must already have sold his own particular commodity, his labour power,
in order to appear with the proceeds as the buyer of the use of a dwelling,
or he must be in a position to give a guarantee of the impending sale of
this labour power. The peculiar results which attend the sale of labour
power to the capitalist are completely absent here. The capitalist causes
the purchased labour power firstly to produce its own value and secondly
to produce a surplus value which remains in his hands for the time being,
subject to its distribution among the capitalist class. In this case therefore
an extra value is produced, the total sum of the existing value is increased.
In the rent transaction the situation is quite different. No matter how
much the landlord may overreach the tenant it is still only a transfer
of already existing, previously produced value, and the total sum of values
possessed by the landlord and the tenant together remains the same after
as it was before. The worker is always cheated of a part of the product
of his labour, whether that labour is paid for by the capitalist below,
above, or at its value.

The tenant, on the other hand, is cheated only when he is compelled
to pay for the dwelling above its value. It is, therefore, a complete misrepresentation
of the relation between landlord and tenant to attempt to make it equivalent
to the relation between worker and capitalist. On the contrary, we are
dealing here with a quite ordinary commodity transaction between two citizens,
and this transaction proceeds according to the economic laws which govern
the sale of commodities in general and in particular the sale of the commodity,
land property. The building and maintenance costs of the house, or of the
part of the house in question, enters first of all into the calculation;
the land value, determined by the more or less favourable situation of
the house, comes next; the state of the relation between supply and demand
existing at the moment is finally decisive. This simple economic relation
expresses itself in the mind of our Proudhonist as follows:

“The house, once it has been built, serves as a perpetual legal
title to a definite fraction of social labour although the real
value of the house has already long ago been more than paid out in
the form of rent to the owner. Thus it comes about that a house
that, for instance, was built fifty years ago, during this period
covers the original cost two, three, five, ten and more times over
in its rent yield.”

Here we have at once the whole Proudhon. Firstly, it is forgotten that
the rent must not only pay the interests on the building costs, but must
also cover repairs and the average sum of bad debts, unpaid rents, as
well as the occasional periods when the house is untenanted, and finally
pay off in annual sums the building capital which has been invested in
a house which is perishable and which in time becomes uninhabitable and
worthless. Secondly, it is forgotten that the rent must also pay interest
on the increased value of the land upon which the building is erected and
that therefore a part of it consists of ground rent. Our Proudhonist immediately
declares, it is true, that this increase of value does not equitably belong
to the landowner, since it comes about without his co-operation, but to
society as a whole. However, he overlooks the fact that with this he is
in reality demanding the abolition of landed property, a point which would
lead us too far if we went into it here. And finally he overlooks the
fact that the whole transaction is not one of buying the house from its
owner, but of buying its use for a certain time. Proudhon, who never bothered
himself about the real and actual conditions under which any economic phenomenon
occurs, is naturally also unable to explain how the original cost price
of a house is paid back ten times over in the course of fifty years in
the form of rent. Instead of examining and establishing this not at all
difficult question economically, and discovering whether it is really in
contradiction to economic laws, and if so how, Proudhon rescues himself
by a bold leap from economics into legal talk: “The house, once it has
been built, serves as a perpetual legal title” to a certain annual payment.
How this comes about, how the house becomes a legal title, on this Proudhon
is silent. And yet – that is just what he should have explained. Had he
examined it, he would have found that not all the legal titles in the world,
no matter how perpetual, could give a house the power of obtaining its
cost price back ten times over in the course of fifty years in the form
of rent, but that only economic conditions (which may have social recognition
in the form of legal titles) can accomplish this. And with this he would
again be as far as at the start.

The whole Proudhonist teaching rests on this saving leap from
economic reality into legal phraseology. Every time our good Proudhon loses
the economic hang of things – and this happens to him with every serious
problem – he takes refuge in the sphere of law and appeals to eternal
justice.

“Proudhon begins by taking his ideal of justice, of ‘justice
eternelle,’ from the juridical relations that correspond to the
production of commodities: thereby, it may be noted, he proves, to
the consolation of all good citizens, that the production of
commodities is a form of production as everlasting as justice.
Then he turns round and seeks to reform the actual production of
commodities, and the actual legal system corresponding thereto, in
accordance with this ideal. What opinion should we have of a
chemist, who, instead of studying the actual laws of the molecular
changes in the composition and decomposition of matter, and on
that foundation solving definite problems, claimed to regulate the
composition and decomposition of matter by means of the ‘eternal
ideas,’ of ‘naturalite and affinite’? Do we really know any more
about ‘usury,’ when we say it contradicts ‘justice kernel,’
‘equite eternelle,’ ‘mutualite eternelle,’ and other ‘verites
eternelles’ than the fathers of the church did when they sad it
was incompatible with ‘grace eternelle,’ ‘foi eternelle,’ and ‘la
volonte eternelle de Dieu’?” [Marx, Capital, Vol. 1, Kerr edition,
footnote, pp. 96-97. - Ed.]

Our Proudhonist does not fare any better than his lord and master:

“The rent agreement is one of the thousand exchanges which are as
necessary in the life of modern society as the circulation of the
blood in the bodies of animals. Naturally, it would be in the
interests of this society if all these exchanges were pervaded by
a conception of justice, that is to say, if they took place always
according to the strict demands of justice. In a word, the
economic life of society must, as Proudhon says, raise itself to
the heights of economic justice. In reality, as we know, exactly
the opposite takes place.”

Is it credible that, five years after Marx had characterised Proudhonism
so summarily and convincingly precisely from this decisive angle, it should
be possible to print such confused stuff in the German language. What does
this rigmarole mean? Nothing more than that the practical effects of the
economic laws which govern present-day society run contrary to the author’s
sense of justice and that he cherishes the pious wish that the affair might
be so arranged that this would then no longer be the case. — Yes, but if
toads had tails they would no longer be toads! And is then the capitalist
mode of production not “pervaded by a conception of justice,” namely, that
of its own right to exploit the workers? And if the author tells us that
that is not his idea of justice, are we one step further?

But let us go back to the housing question. Our Proudhonist now
gives his “conception of justice” free rein and treats us to the following
moving declamation:

“We do not hesitate to assert that there is no more terrible
mockery of the whole culture of our lauded century than the fact
that in the big cities 90 per cent and more of the population have
no place that they can call their own. The real key point of moral
and family existence, hearth and home, is being swept away by the
social whirlpool.... In this respect we are far below the savages.
The troglodyte has his cave, the Australian aborigine has his clay
hut, the Indian has his own hearth – the modern proletarian is
practically suspended in mid air,” etc.

In this jeremiad we have Proudhonism in its whole reactionary form. In
order to create the modern revolutionary class of the proletariat it was
absolutely necessary to cut the umbilical cord which still bound the worker
of the past to the land. The hand weaver who had his little house, garden
and field along with his loom, was a quiet, contented man “in all godliness
and respectability” despite all misery and despite all political pressure;
he doffed his cap to the rich, to the priests and to the officials of the
state; and inwardly was altogether a slave. It is precisely modern large-scale
industry, which has turned the worker, formerly chained to the land, into
a completely propertyless proletarian, liberated from all traditional fetters
and free as a [jail-]bird; it is precisely this economic revolution which has
created the sole conditions under which the exploitation of the working
class in its final form, in the capitalist mode of production, can be overthrown.
And now comes this tearful Proudhonist and bewails the driving of the workers
from hearth and home as though it were a great retrogression instead of
being the very first condition for their intellectual emancipation.

Twenty-seven years ago I described in The Condition of the Working
Class in England the main features of just this process of driving the
workers from hearth and home as it took place in the eighteenth century
in England. The infamies of which the landowners and factory owners were
guilty in so doing, and the deleterious effects, material and moral, which
this expulsion inevitably had on the workers concerned in the first place,
are there also described as they deserve. But could it enter my head to
regard this, which was in the circumstances an absolutely necessary historical
process of development, as a retrogression “below the savages”? Impossible!
The English proletarian of 1872 is on an infinitely higher level than the
rural weaver of 1772 with his “hearth and home.” Will the troglodyte with
his cave, the Australian aborigine with his clay hut, and the Indian with
his hearth ever accomplish a June insurrection and a Paris Commune?

That the situation of the workers has in general become materially
worse since the introduction of capitalist production on a large scale
is doubted only by the bourgeoisie. But should therefore look backward
longingly to the (likewise very meager) flesh-pots of Egypt, to rural small-scale
industry, which produced only servile souls, or to “the savages”? On the
contrary.

Only the proletariat created by modern large-scale industry, liberated
from all inherited fetters, including those which chained it to the land,
and driven in herds into the big towns, is in a position to accomplish
the great social transformation which will put an end to all class exploitation
and all class rule. The old rural hand weavers with hearth and home would
never have been able to do it; they would never have been able to conceive
such an idea, much less able to desire to carry it out.

For Proudhon, on the other hand, the whole industrial revolution
of the last hundred years, the introduction of steam power and large-scale
factory production which substituted machinery for hand labour and increased
the productivity of labour a thousandfold, is a highly repugnant occurrence,
something which really ought never to have taken place. The petty-bourgeois
Proudhon demands a world in which each person turns out a separate and
independent product that is immediately consumable and exchangeable in
the market. Then, as long as each person only receives back the full value
of his labour in the form of another product, “eternal justice” is satisfied
and the best possible world created. But this best possible world of Proudhon
has already been nipped in the bud and trodden underfoot by the advance
of industrial development which has long ago destroyed individual labour
in all the big branches of industries and which is destroying it daily
more and more in the smaller and smallest branches which has set social
labour supported by machinery and the harnessed forces of nature in its
place, and whose finished product immediately exchangeable or consumable,
is the joint work of many individuals through whose hands it has to pass.
And it is precisely this industrial revolution which has raised the productive
power of human labour to such a high level that – for the first time in
the history of humanity – the possibility exists, given a rational division
of labour among all, to produce not only enough for the plentiful consumption
of all members of society and for an abundant reserve fund, but also to
leave each individual sufficient leisure so that what is really worth preserving
in historically inherited culture – science, art, human relations is not
only preserved, but converted from a monopoly of the ruling class into
the common property of the whole of society, and further developed. And
here is the decisive point: as soon as the productive power of human labour
has developed to this height, every excuse disappears for the existence
of a ruling class. Was not the final reason with which class differences
were defended always: there must be a class which need not plague itself
with the production of its daily subsistence, in order that it may have
time to look after the intellectual work of society? This talk, which up
to now had its great historical justification, has been cut off at the
root once and for all by the industrial revolution of the last hundred
years. The existence of a ruling class is becoming daily more and more
a hindrance to the development of industrial productive power, and equally
so to science, art and especially cultural human relations. There never
were greater boors than our modern bourgeois.

But all this is nothing to friend Proudhon. He wants “eternal
justice” and nothing else. Each shall receive in exchange for his product
the full proceeds of his labour, the full value of his labour. But to reckon
that out in a product of modern industry is a complicated matter. For modern
industry obscures the particular share of the individual in the total product,
which in the old individual handicraft was obviously represented by the
finished product. Further, modern industry abolishes more and more the
individual exchange on which Proudhon’s whole system is built up, namely
direct exchange between two producers, each of whom takes the product of
the other in order to consume it. Consequently a reactionary character
runs throughout the whole of Proudhonism; an aversion to the industrial
revolution, and the desire, sometimes overtly, sometimes covertly expressed,
to drive the whole of modern industry out of the temple, steam engines,
mechanical looms and the rest of the swindle, and to return to the old,
respectable hand labour. That we would then lose nine hundred and ninety-nine
thousandths of our productive power, that the whole of humanity would be
condemned to the worst possible labour slavery, that starvation would become
the general rule – what does all that matter if only we succeed in organising
exchange in such a fashion that each receives “the full proceeds of his
labour,” and that “eternal justice” is realized? Fiat justitia, pereat
mundus!

Justice must prevail though the whole world perish!

And the world would perish in this Proudhonist counter-revolution
if it were at all possible to carry it out.

It is, moreover, self-evident that, with social production conditioned
by modern large-scale industry, it is possible to assure each person “the
full proceeds of his labour,” so far as this phrase has any meaning at
all. And it has a meaning only if it is extended to mean not that each
individual worker becomes the possessor of “the full proceeds of his
labour,” but that the whole of society, consisting entirely of workers,
becomes the possessor of the total proceeds of its labour, which it partly
distributes among its members for consumption, partly uses for replacing
and increasing the means of production, and partly stores up as a reserve
fund for production and consumption.

After what has been said above, we already know in advance how our Proudhonist
will solve the great housing question. On the one hand, we have the demand
that each worker own his own home in order that we may not remain “below
the savages.” On the other hand, we have the assurance that the two, three,
five or tenfold repayment of the original cost price of a house in the
form of rent, as it actually takes place, is based on a “legal title” and
that this legal title is in contradiction to “eternal justice.” The solution
is simple: we abolish the legal title and declare, in virtue of eternal
justice, the rent paid to be a payment on account of the cost of the dwelling
itself. If one has so arranged on premises that they already contain the
conclusion in them, then of course it demands no greater skill than any
charlatan possesses to produce the already prepared result from the bag
and to point to unshakable logic whose result it is.

And so it happens here. The abolition of rented dwellings proclaimed
as an necessity, and indeed in the form that the demand is put forward
for the conversion of every tenant into the owner of his own dwelling.
How are we to do that? Very simply:

“Rented dwellings will be redeemed.... The previous house owner
will be paid the value of Ws house to the last farthing. Rent,
instead of being as previously the tribute which the tenant must
pay to the perpetual title of capital, will be, from the day when
the redemption of rented dwellings is proclaimed, the exactly
fixed sum paid by the tenant to provide the annual installment for
the payment of the dwelling which has passed into the possession
of the tenant.... Society... transforms itself in this way into a
totality of independent and free owners of dwellings.”

The Proudhonist finds it a crime against eternal justice that the house
owner can without working obtain ground rent and interest out of the capital
he has invested in the house. He decrees that this must cease, that capital
invested in houses shall produce no interest, and so far as it represents
purchased landed property, no ground rent either. Now we have seen that
hereby the capitalist mode of production, the basis of present-day society,
is in no way affected. The pivot on which the exploitation of the worker
turns is the sale of labour power to the capitalist and the use which the
capitalist makes of this transaction in that he compels the worker to produce
far more than the paid value of the labour power amounts to. It is this
transaction between capitalist and worker which produces all the surplus
value which is afterwards divided in the form of ground rent, commercial
profit, interest on capital, taxes, etc., among the various sub-species
of capitalists and their servants. And now our Proudhonist comes along
and believes that if we were to forbid one single sub-species of capitalists,
and at that of such capitalists who purchase no labour power directly and
therefore also cause no surplus value to be produced, to receive profit
or interest, it would be a step forward! The mass of unpaid labour taken
from the working class would remain exactly the same even if house owners
were to be deprived tomorrow of the possibility of receiving ground rent
and interest. However, this does not prevent our Proudhonist from declaring:

“The abolition of rent dwellings is thus one of the most fruitful and magnificent
efforts which has ever sprung from the womb of the revolutionary idea and
it must become one of the primary demands of Social-Democracy.”

This is exactly the type of market cry of the master Proudhon himself, whose cackling
was always in inverse ratio to the size of the eggs laid.

And now imagine the fine state of things if each worker, petty
bourgeois and bourgeois were compelled by paying annual installments to
become first part owner and then full owner of his dwelling! In the industrial
districts in England, where there is large-scale industry but small workers’
houses and each married worker occupies a little house of his own, there
might possibly be some sense in it. But the small-scale industry in Paris
and in most of the big towns on the continent is accompanied by large houses
in each of which ten, twenty or thirty families live together. On the day
of the world-delivering decree, when the redemption of rent dwellings is
proclaimed, Peter is working in an engineering works in Berlin. A year
later he is owner of, if you like, the fifteenth part of his dwelling consisting
of a little room on the fifth floor of a house somewhere in the neighborhood
of Hamburger Tor. He then loses his work and soon finds himself in a similar
dwelling on the third floor of a house in the Pothof in Hanover with a
wonderful view on to the courtyard. After five months’ stay there he has
just acquired 1/36 of this property when a strike sends
him to Munich and compels him by a stay of eleven months to take on himself
ownership in exactly 11/180 of a rather gloomy
property on the street level behind the Ober-Angergasse. Further removals
such as nowadays so often occur to workers saddle him further with 7/360 of a no less desirable residence in St. Gallen, 23/180 of another one in Leeds, and 347/56223,
to reckon it out exactly in order that “eternal justice” may have nothing
to complain about, of a third dwelling in Seraing. And now what is the
use for our Peter of all these shares in dwellings? Who is to give him
the real value of these shares? Where is he to find the owner or owners
of the remaining shares in his various one-time dwellings? And what exactly
are the property relations of any big house whose floors hold, let us say,
twenty dwellings and which, when the redemption period has elapsed and
rented dwellings are abolished, belongs perhaps to three hundred part owners
who are scattered in all quarters of the globe. Our Proudhonist will answer
that by that time the Proudhonist exchange bank will exist and will pay
to anyone at any time the full labour proceeds for any labour product,
and will therefore pay out also the full value of a share in a dwelling.
But in the first place we are not at all concerned here with the Proudhonist
exchange bank since it is nowhere even mentioned in the articles on the
housing question, and secondly it rests on the peculiar error that if someone
wants to sell a commodity he will necessarily also find a buyer for its
full value and thirdly it has already gone bankrupt in England more than
once under the name of Labour Exchange Bazaar, before Proudhon invented
it.

The whole conception that the worker should buy his dwelling rests
in its turn on the reactionary basic outlook of Proudhonism, already emphasized,
according to which the conditions created by modern large-scale industry
are diseased excrescences, and that society must be led violently, i.e.,
against the trend which it has been following for a hundred years, to a
condition in which the old stable handicraft of the individual is the rule,
which as a whole is nothing but the idealized restoration of small-scale
enterprise, which has been ruined and is still being ruined. If the workers
are only flung back into these stable conditions, if the “social whirlpool”
has been happily abolished, then the worker naturally could also again
make use of property in “hearth and home,” and the above redemption theory
appears less ridiculous. Proudhon only forgets that in order to accomplish
all this he must first of all put back the clock of world history by a
hundred years, and that thereby he would make the present-day workers into
just such narrow-minded, crawling, sneaking slaves as their great-grandfathers
were.

As far, however, as this Proudhonist solution of the housing question
contains any rational and practically applicable content it is already
being carried out today, but this realization does not spring from “the
womb of the revolutionary idea,” but from the big bourgeois himself. Let
us listen to an excellent Spanish newspaper, La Emancipacion, of Madrid
of March 16, 1872:

“There is still another means of solving the housing question, the
way proposed by Proudhon, which dazzles at first glance, but on
closer examination reveals its utter impotence. Proudhon proposed
that the tenants should be converted into purchasers by
installments, so that the rent paid annually would be reckoned as
an installment on the payment of the value of the dwelling, and,
after a certain time, the tenant would become the owner of the
dwelling. This means, which Proudhon considered very
revolutionary, is being put into operation in all countries by
companies of speculators who thus secure double and treble payment
of the value of the houses by raising the rents. M. Dollfus and
other big manufacturers in Northeastern France have carried out
this system not only in order to make money, but in addition, with
a political idea at the back of their minds.

“The cleverest leaders of the ruling class have always directed their efforts
towards increasing the number of small property owners in order to build
an army for themselves against the proletariat. The bourgeois revolutions
of the last century divided up the big estates of the nobility and the
church into small properties, just as the Spanish republicans propose to
do today with the still existing large estates, and created thereby a class
of small landowners which has since become the most reactionary element
in society and a permanent hindrance to the revolutionary movement of the
urban proletariat. Napoleon III aimed at creating a similar class in the
towns by reducing the size of the individual bonds of the public debt,
and M. Dollfus and his colleagues sought to stifle all revolutionary spirit
in their workers by selling them small dwellings to be paid for in annual
installments, and at the same time to chain the workers by this property
to the factory in which they work. Thus we see that the Proudhon plan has
not merely failed to bring the working class any relief, it has even turned
directly against it.” *

[How this solution of the housing question by means of chaining
worker to his own “home” is arising spontaneously in the neighborhood of
big or growing American towns can be seen from the following passage of
a letter by Eleanor Marx-Aveling, Indianapolis, November 28, 1886: “In,
or rather near Kansas City we saw some miserable little wooden huts, containing
about three rooms each, still in the wilds; the land cost 600 dollars and
was just enough to put the little house on it; the latter cost a further
600 dollars, that is together about 4,800 marks [£240] for a miserable
little thing, an hour away from the town, in a muddy desert.” In this way
the workers must shoulder heavy mortgage debts in order to obtain even
these houses and thus they become completely the slaves of their employers;
they are bound to their houses, they cannot go away, and they are compelled
to put up with whatever working conditions are offered them. — Note by F.
Engels to the second German edition.]

How is the housing question to be solved then?
In present-day society just as any other social question is
solved: by the gradual economic adjustment of supply and demand, a solution
which ever reproduces the question itself anew and therefore is no solution.
How a social revolution would solve this question depends not only on the
circumstances which would exist in each case, but is also connected with
still more far-reaching questions, among which one of the most fundamental
is the abolition of the antithesis between town and country. As it is not
our task to create utopian systems for the arrangement of the future society,
it would be more than idle to go into the question here. But one thing
is certain: there are already in existence sufficient buildings for dwellings
in the big towns to remedy immediately any real “housing shortage,” given
rational utilization of them. This can naturally only take place by the
expropriation of the present owners and by quartering in their houses the
homeless or those workers excessively overcrowded in their former houses.
Immediately the proletariat has conquered political power such a measure
dictated in the public interests will be just as easy to carry out as other
expropriations and billetings are by the existing state.

However, our Proudhonist is not satisfied with his previous achievements
in the housing question. He must raise the question from the level ground
into the sphere of the higher socialism in order that it may prove there
also an essential “fractional part of the social question:”

“Let us now assume that the productivity of capital is really
taken by the horns, as it must be sooner or later, for instance by
a transitional law which fixes the interest on all capitals at one
per cent, but mark you, with the tendency to make even this rate
of interest approximate more and more to the zero point so that
finally nothing more would be paid than the labour necessary to
turn over the capital. Like all other products, houses and
dwellings are naturally also included within the framework of this
law.... The owner himself would be the first one to agree to a
sale because otherwise his house would remain unused and the
capital invested in it would be simply useless.”

This passage contains one of the chief articles of faith of the Proudhonist
catechism and offers a striking example of the confusion prevailing in
it.

The “productivity of capital” is an absurdity that Proudhonism
takes over uncritically from the bourgeois economists. The bourgeois economists,
it is true, also begin with the statement that labour is the source of
all wealth and the measure of value of all commodities; but they also have
to explain how it comes about that the capitalist who advances capital
for an industrial or handicraft business receives back at the end of it
not only the capital which he advanced, but also a profit over and above
it. In consequence they are compelled to entangle themselves in all sorts
of contradictions and also to ascribe to capital a certain productivity.
Nothing proves more clearly how deeply Proudhon remains entangled in the
bourgeois ideology than the fact that he has taken over this phrase about
the productivity of capital. We have already seen at the beginning that
the so-called “productivity of capital” is nothing but the quality attached
to it (under present-day social relations, without which it would not be
capital at all) of being able to appropriate the unpaid labour of wage
workers.

However, Proudhon differs from the bourgeois economists in that
he does not approve of this “productivity of capital,” but, on the contrary,
finds it a violation of “eternal justice.” It is this which prevents the
worker from receiving the full proceeds of his labour. It must therefore
be abolished. But how? By lowering the rate of interest by compulsory legislation
and finally by reducing it to zero. And then, according to our Proudhonist,
capital would cease to be productive.

The interest on loaned money capital is only a part of profit;
profit, whether on industrial or commercial capital, is only a part of
the surplus value taken by the capitalist class from the working class
in the form of unpaid labour. The economic laws which govern the rate of
interest are as independent of those which govern the rate of surplus value
as could possibly be the case between laws of one and the same social form.
But as far as the distribution of this surplus value among the individual
capitalists is concerned, it is clear that for those industrialists and
business men who have large quantities of capital in their businesses advanced
by other capitalists, the rate of their profit must rise – all other things
being equal – to the same extent as the rate of interest falls. The reduction
and final abolition of interest would therefore by no means really take
the so-called “productivity of capital” “by the horns”; it would do no
more than re-arrange the distribution among the individual capitalists
of the unpaid surplus value taken from the working class; it would not,
therefore, give an advantage to the worker as against the industrial capitalist,
but to the industrial capitalist as against the rentier.

Proudhon, from his legal standpoint, explains interest, as he
does all economic facts, not by the conditions of social production, but
by the state laws in which these conditions receive their general expression.
From this point of view, which lacks any inkling of the inter-relation
between the state laws and the conditions of production in society, these
state laws necessarily appear as purely arbitrary orders which at any moment
could be replaced just as well by their exact opposite. Nothing is therefore
easier for Proudhon than to issue a decree – as soon as he has the power
to do so – reducing the rate of interest to one per cent. And if all the
other social conditions remained as they were, then indeed this Proudhonist
decree would exist on paper only. The rate of interest will continue to
be governed by the economic laws to which it is subject today, despite
all decrees. Persons possessing credit will continue to borrow money at
two, three, four and more per cent, according to circumstances, just as
much as before, and the only difference will be that the financiers will
be very careful to advance money only to persons from whom no subsequent
court proceedings might be expected. Moreover this great plan to deprive
capital of its “productivity” is as old as the hills; it is as old as-the
usury laws which aimed at nothing else but limiting the rate of interest,
and which have since been abolished everywhere because in practice they
were continually broken or circumvented, and the state was compelled to
admit its impotence against the laws of social production. And the reintroduction
of these mediaeval and unworkable laws is now “to take the productivity
of capital by the horns?” One sees that the closer Proudhonism is examined
the more reactionary it appears.

When, now, in this fashion the rate of interest has been reduced
to zero, and interest on capital therefore abolished, then “nothing more
would be paid than the labour necessary to turn over the capital.” This
means that the abolition of interest is equivalent to the abolition of
profit and even of surplus value. But if it were possible really to abolish
interest by decree what would be the consequence? The class of rentiers
would no longer have any inducement to loan out their capital in the form
of advances, but would invest it industrially themselves or in joint-stock
companies on their own account. The mass of surplus value extracted from
the working class by the capitalist class would remain the same; only its
distribution would be altered, and even that not much.

In fact, our Proudhonist fails to see that, even now, no more
is paid on the average in commodity purchase in bourgeois society than
“the labour necessary to turn over the capital” (it should read, necessary
for the production of the commodity in question). Labour is the measure
of value of all commodities, and in present-day society – apart from fluctuations
of the market – it is absolutely impossible that on a total average more
should be paid for commodities than the labour necessary for their production.
No, no, my dear Proudhonist, the difficulty lies elsewhere: it is contained
in the fact that “the labour necessary to turn over the capital” (to use
your confused terminology) is not fully paid! How this comes about you
can look up in Marx (Capital pp. 128-60).

But that is not enough. If interest on capital is abolished, house
rent is also abolished with it; for, “like all other products, houses and
dwellings are naturally also included within the framework of this law.”
This is quite in the spirit of the old Major who summoned one of the new
recruits and declared:

“I say, I hear you are a doctor; you might report from time to
time at my quarters; when one has a wife and seven children there is always
something to patch up.”

Recruit: “Excuse me, Major, but I am a doctor of philosophy.”

Major: “That’s all the same to me; one sawbones is the same as
another.”

Our Proudhonist behaves just like this: house rent or interest
on capital, it is all the same to him. Interest is interest; sawbones is
sawbones.

We have seen above that the rent price commonly called house rent
is composed as follows:

a part which is ground rent;

a part which is interest on the building capital, including the profit
of the builder;

a part which is for costs of repairs and insurance;

a part which has to amortize the building capital inclusive of profit in
annual deductions according to the rate at which the house gradually depreciates.

And now it must have become clear even to the blindest that

“the owner himself would be the first one to agree to a sale because otherwise his
house would remain unused and the capital invested in it would be simply
useless.”

Of course. If the interest on loaned capital is abolished then
no house owner can obtain a penny piece in rent for his house, simply because
house rent is spoken of as interest and because the rent contains a part
which is really interest on capital. Sawbones is sawbones. Though it was
only possible to make the usury laws relating to ordinary interest on capital
ineffective by circumventing them, yet they never touched even remotely
the rate of house rent. It was reserved for Proudhon to imagine that his
new usury law would without more ado regulate and gradually abolish not
only simple interest on capital, but also the complicated house rents of
dwellings. Why then the “simply useless” house should be purchased for
good money from the house owner, and how it is that under such circumstances
the house owner would not also pay money himself to get rid of this “simply
useless” house in order to save himself the cost of repairs, we are not
told.

After this triumphant achievement in the sphere of higher socialism
(Master Proudhon called it super-socialism) our Proudhonist considers himself
justified in flying still higher:

“All that has now to be done is to draw
some conclusions in order to cast complete light from all sides on our
so important subject.”

And what are these conclusions? They are things
which follow as little from what has been said before, as that dwelling
houses would become valueless on the abolition of interest. Deprived of
the pompous and solemn phraseology of their author, they mean nothing more
than that, in order to facilitate the business of redemption of rented
dwellings, what is desirable is: 1. exact statistics on the subject; 2.
a good sanitary inspection force; and 3. co-operatives of building workers
to undertake the building of new houses. All these things are certainly
very fine and good, but, despite all the clothing of quack phrases, they
by no means cast “complete light” into the obscurity of Proudhonist mental
confusion.

One who has achieved so much feels he has the right to deliver
the following serious exhortation to the German workers:

“In our opinion, such and similar questions are well worth the
attention of Social-Democracy.... Let them therefore, as here in
connection with the housing question, seek to become clear on
other and equally important questions such as credit, state debts,
private debts, taxation,” etc.

Thus, our Proudhonist here faces us with the prospect of a whole series
of articles on “similar questions,” and if he deals with them all as thoroughly
as the present “so important subject,” then the Volksstaat will have copy
enough for a year. But we are in a position to anticipate: – it all amounts
to what has already been said: interest on capital is to be abolished and
with that the interest on public and private debts disappears, credit will
be gratis, etc. The same magic formula is applied to every subject and
in each separate case the same astonishing result is obtained with inexorable
logic, namely, that when interest on capital has been abolished no more
interest will have to be paid on borrowed money.

They are fine questions, by the way with which our Proudhonist
threatens us: Credit! What credit does the worker need apart from that
from week to week, or the credit he obtains from the pawnshop? Whether
he gets this credit free or at interest, even at the usurious interests
of the pawnshop, how much difference does that make to him? And if he did,
generally speaking, obtain some advantage from it, that is to say, if the
costs of production of labour power were reduced, would not the price of
labour power necessarily fall also? But for the bourgeois, and in particular
for the petty bourgeois, credit is an important matter and it would therefore
be a very fine thing for them, and in particular for the petty bourgeois,
if credit could be obtained at any time and, in addition, without payment
of interest. “State debts!” ‘The working class knows very well that it
did not make the state debt, and when it comes to power it will leave the
payment of it to those who did make it. “Private debts!” – see credit.
“Taxes!” Matters that interest the bourgeoisie very much, but the worker
only very little. What the worker pays in taxes goes in the long run into
the costs of production of labour power and must therefore be compensated
for by the capitalist. All these things which are held up to us here as
highly important questions for the working class are in reality of essential
interest only to the bourgeoisie, and in particular to the petty bourgeoisie,
and, despite Proudhon, we assert that the working class is not called upon
to look after the interests of these classes.

Our Proudhonist has not a word to say about the great question
which really concerns the workers, that of the relation between capitalist
and wage worker, the question of how it comes about that the capitalist
can enrich himself from the labour of his workers. His lord and master
it is true, did occupy himself with it, but introduced absolutely no clearness
into it, and even in his latest writings he has got essentially no farther
than he was in his Philosophie de la Misère [Philosophy of Poverty] which
Marx disposed of so conclusively in all its emptiness in 1847.

It was bad enough that for twenty-five years the workers of the
Latin countries had almost no other socialist mental nourishment than the
writings of this “Socialist of the Second Empire,” and it would be a double
misfortune if Germany were now to be inundated with the Proudhonist theory.
However, there need be no fear of this. The theoretical standpoint of the
German workers is fifty years ahead of that of Proudhonism, and it will
be sufficient to make an example of it in this one question of housing
in order to save any further trouble in this respect.